In the historically insular world of brand loyalty programs, companies work hard to keep their customers -- and their wallets -- securely under one roof. As loyalty strategies continue to evolve, brand marketers are rethinking how they look at their loyalty-based customer engagement efforts. Many companies are moving toward a "rising tide lifts all ships" approach by becoming part of coalition loyalty programs. Already successful internationally, coalition programs are moving into the mainstream in the U.S. as brands have begun teaming up with like-minded companies from a wide range of industries to provide a larger array of incentives and benefits to their customers.
The key differentiator of coalition loyalty programs is an interchangeability not normally found within the loyalty world. Some examples include Plenti, Upromise, and the Canadian-based Air Miles program. Under the umbrella of coalition, consumers who buy from one company receive rewards for those purchases and can redeem earned points from any other company within the group. This freedom of movement for the consumer runs counter to the entire foundational principle of loyalty, which says customers should be rewarded for money spent only with that brand. Now, however, that historical viewpoint is changing, thanks to the growing adoption by brands of a more holistic and inclusive approach that recognizes strength in numbers and value in diversification.
Why coalition loyalty programs matter
While partnering with non-competitive companies to help broaden the scope and reach of a loyalty platform is nothing new -- think Pepsi and Papa John's collaborating on a beverage sales push, for example -- coalition loyalty goes beyond simply trying to cross-pollinate audiences. Participants in a coalition loyalty program usually come from diverse industries that often have little customer overlap and include brands from many verticals. This kind of diversification solves a frequency problem for brands that don't see their customers often. In addition, it solves a brand affinity problem for companies and products that are seen as transactional, or elicit little emotional attachment.
Take Nike, a company with one of the strongest brands in the world. It may not experience any issues with loyalty, but it may have trouble with frequency of purchases. Realistically, most customers only make a purchase once or twice a year due to cost and necessity. On the other hand, a brand like Jamba Juice might have the same customer visit one of its shops dozens of times a year. If Nike and Jamba Juice were part of a coalition, the frequency with which customers would earn rewards for their purchases at Jamba Juice would result in driving them to Nike sooner than they might have otherwise. In return, Jamba Juice would receive the associative bump by aligning with a leading global brand and encourage continued purchases to earn rewards to redeem at Nike.
One of the most well-known coalition programs in the U.S. is the American Express-driven Plenti platform. From energy providers and telecoms like Direct Energy and AT&T, to insurance companies and retailers like Nationwide and Macy's, consumers have a wide array of purchasing options and potential incentives. Additionally, an online component allows people to shop via the internet and continue earning.
Three strategies for coalition loyalty programs
While coalition programs are revolutionary in how they frame loyalty as a whole, they follow the old-school model of awarding "points for purchases." But there are many more valuable activities that extend beyond purchases alone. Here are three strategies for coalition programs going forward:
1. Increase social and online activity. Since many of these platforms are centered around an online account where users can track past activity and points, program administrators could easily build in features and incentivize relevant social media activity, web browsing, interaction with branded content, or provide product reviews and feedback. All of these actions are valuable because they result in increased direct interaction with each brand.
3. Expand beyond points-for-purchases. By sticking strictly with the traditional points-for-purchase model, brands are leaving great engagement techniques on the table. If companies want to remain in the loyalty avant garde, they must embrace coalition programs while also integrating new points-for-action strategies that other leading, non-coalition loyalty programs are implementing. Coalition loyalty programs are a step forward, but participating brands should expand to the present day multichannel approach of rewarding for engagement-based strategies to maximize their effectiveness and reach.